1.A company has 3 plants at which it produces its output.The plants are in Columbus, Lansing, and Baltimore.Assume labor is the only input used to produce the output.You are given the following data on each plant, the marginal product (MP) of its labor, the average product of labor (AP) and the wage rate (W) paid at that plant.Assume the firm is following a cost minimization strategy.

PlantMP(output) AP(output)Wage (cost)

Columbus48 units per hour30 units per hour$12 per hour

Lansing, MI42 units per hour28 units per hour$14 per hour

Baltimore50 units per hour50 units per hour$25 per hour

a.Suppose due to financial problems the company decides to close one of its plants in an effort to reduce costs and inefficiencies.Which of the 3 plants should it close and why?

b.The company has decided to move some workers from the plant it closed in a) to another plant.Which plant should the company move displaced workers to and why that plant?

c.Suppose at the time the company is deciding which plant to close, the state of Ohio institutes a new wage law that forces the company to pay its Columbus workers a new higher wage of $16 per hour (assume it does not impact the marginal product at the plant).Does this change your answer to part a above?Your answer to part b above?Explain.